One of Scotland's most high-profile transport projects may no longer be economically viable, a new independent report has suggested.

Ernst & Young has warned that the proposed £350 million Borders Railway scheme is unlikely to provide a return on investment, the Herald reports.

Plans to build hundreds of houses along the route have been scrapped and so the passenger demand has fallen considerably.

The cost of reinstating the line between Edinburgh and Tweedbank has already risen from the original quote of £300 million and risk assessor Peter Smail told the news provider that the cost-benefit ratio is poor.

"There is no rail project I have ever heard of in the rest of the UK where anything like this ratio has been accepted," he was quoted as saying.

Despite this, Transport Scotland is adamant that the development will bring major benefits, as it will enable more people to gain access to Edinburgh city centre.

The railway - which has been out of action since 1969 - will stretch for 30 miles and seven new stations will be built along the route.